Western Vegetable Oils Co. v. Southern Cotton Oil Co.

Southern Cotton Oil Company contracted with Western Vegetable Oils Company for the purchase of a tank car of coconut oil. Western, in July 1941, loaded the oil into one of its tank cars and delivered the car to Southern Pacific Company at Oakland for transportation to Gretna, Louisiana. The oil (which had been paid for by the purchaser) was lost in transit.

For convenience Southern Cotton Oil Company will hereafter be called the buyer, Western Vegetable Oils Company the seller, and Southern Pacific Company the carrier.

The buyer presented its claim both to the seller and the carrier, each of which appears to have blamed the other for the nondelivery of the oil. In November 1942 the buyer brought suit against the seller and the carrier, there meanwhile having been some correspondence in the course of which the president of the seller suggested that “arbitration might be the sensible thing.” In its answer in the suit the seller asked for a stay of proceedings until arbitration could be had, and later filed a motion to the same effect. This motion the trial court denied, and the seller appeals.

The contract of sale contained a “clause paramount” to the effect that “this contract…

(dissenting).

I dissent. As stated in the main opinion the contract between the Western Vegetable Oils Company and the Southern Cotton Oil Company made the rules of the National Institute of Oilseed Products a part of the contract of sale. The rules provided for an arbitration of disputes arising under the contract. The contract of sale required the seller to furnish a railroad tank car for the transportation of the oil. The damages claimed are for furnishing a defective car. This claim clearly arises out of the contract and, consequently, is subject to the agreement to arbitrate. I cannot see that the incorporation of the rules of the Institute concerning arbitration is modified or affected by the fact that the parties did not use a form of contract containing a similar clause, as stated in the main opinion. If this were an action to reform the contract by excluding the arbitration provision such evidence would be significant, but not in this case which is based upon the contract as written.

The arbitration clause of the contract is enforcible under the laws of California which are referred to and made a part of the contract and also by the federal statute covering arbitration.…